Four-year high for Scottish private sector output

Scotland's private sector output growth hit its strongest level in more than four years last month despite employers taking on fewer workers.

Malcolm Buchanan pointed to favourable inflows of new work. Picture: Gary Baker

The latest purchasing managers’ index (PMI) study from Royal Bank of Scotland – published today – shows that private sector businesses expanded activity sharply in August.

The seasonally adjusted headline figure of 55.5 was up from 55.1 in July. Growth has accelerated in each of the past five months, and the latest result was indicative of the strongest pace of expansion for just over four years, RBS noted.

New order receipts remained favourable, leading to a third monthly rise in backlogs of work. Firms continued to hire additional staff, but the rate of increase slowed to a “mild pace”. Higher workforce numbers in conjunction with sterling weakness contributed to a further sharp rise in operating costs.

Malcolm Buchanan, chair, Scotland board at RBS, said: “Momentum in Scotland’s private sector economy has been building since the start of the second quarter and latest data continued this trend.

“Business activity increased at the strongest rate for over four years in August. The upturn was supported by favourable inflows of new work, which increased at a faster pace than that for the UK as a whole.”